As Hong Kong intensifies its integration with the mainland, opening its arms to mainland visitors and investors, many have pointed to how the city gains economically from such cross-pollination. Indeed, the influx of mainland visitors has boosted the local tourism and retail industries. The mainland factor also enabled us to make a quick recovery from the global financial crisis. This is a far cry from the early post-handover years, when local people were very worried about the city being 'mainlandised'. Nowadays, they blame the government for not doing enough to lobby the central government to feature Hong Kong more prominently in the national five-year plan, or fight for better provisions in the Closer Economic Partnership Arrangement to aid the entry of our enterprises and professionals into the mainland market. The mainland has almost been proclaimed the guarantor of the city's growth and prosperity. The reality for Hong Kong, though, lies between the two extremes of total pessimism and optimism. Economic integration is a two-way street; gain comes with pain. Just two years ago, people were excited about mainland investors buying into the local property market, pushing up housing prices and escalating the wealth effect. Now, many complain that property prices are out of control, partly due to such mainland purchases and speculation. The anxieties of young members of our middle class who do not own their own home are feeding into the growing social discontent. Most economists and analysts forecast a continuing upward surge in property prices in the year ahead. A recent study by Polytechnic University concluded that up to 30 per cent of Hong Kong households are sandwich-class families who cannot afford to buy a home but do not qualify for public housing. Demographia, a US-based urban planning consultancy, rated properties in Hong Kong 'severely unaffordable', worse than other high-priced cities like London and New York. Repeated government attempts to cool the overheating have resulted only in a brief pause, not a halt, to the upward trend. More stringent action by mainland authorities to control price inflation will, ironically, only drive more hot money to Hong Kong where the government, bound by its free-market philosophy, is always hesitant about intervention. The recent shortage of milk powder for local babies has raised a different kind of alarm. According to various accounts, the shortage was due to frantic purchases by mainlanders prepared to buy milk powder in bulk from local retailers. Arguably, this is supply and demand at work, but it appears that Hong Kong is starting to be a victim of its own reputation for safe products and food. While suggestions in some quarters of imposing a milk powder 'departure tax' sound far-fetched, one can detect the snowballing sentiment of local protectionism, reminding us of a similar uproar when pregnant mainlanders were accused of overusing services in local hospitals a few years ago. These are not isolated phenomena, but reflect the changing nature of Hong Kong's market as it integrates further with the mainland. Hong Kong benefits economically because it is no longer a 'local' market, yet risks also come precisely from such change. It is fast becoming a place for visits, education, medical treatment, purchase of consumer goods, and investment for the whole nation. The purchasing power of even a tiny percentage of the mainland will be able to shape, overwhelm or distort the local economy. There is no going back to cross-border restrictions. However, policymakers must not assess social needs and economic demands with reference just to the local population; increasingly, they have to factor in the large numbers of mainland visitors and migrants, and demands originating from the mainland that are creating pressure on the local housing, transport, health care, education and even employment markets. While the 'one country, two systems' approach still prevails as a constitutional framework to preserve the autonomy of Hong Kong institutions, social and economic integration will soon make the 'two systems' less separable in daily life. Even the Hong Kong dollar is giving way to the yuan; Hong Kong may, in due course, become a dual-currency economy. The scale of change from integration needs to be fully recognised in our policy-thinking and assumptions. Anthony Cheung Bing-leung is an executive councillor and founder of SynergyNet, a policy think tank